Over-exploited fisheries are a common feature of the modern world and a range of solutions including area closures (marine reserves; MRs), effort reduction, gear changes, ecosystem-based management, incentives and co-management have been suggested as techniques to rebuild over-fished populations. Historic accounts of lobster (Jasus frontalis) on the Chilean Juan Fernández Archipelago indicate a high abundance at all depths (intertidal to approximately 165 m), but presently lobsters are found almost exclusively in deeper regions of their natural distribution. Fishers' ecological knowledge (FEK) tells a story of serial depletion in lobster abundance at fishing grounds located closest to the fishing port with an associated decline in catch per unit effort (CPUE) throughout recent history. We have re-constructed baselines of lobster biomass throughout human history on the archipelago using historic data, the fishery catch record and FEK to permit examination of the potential effects of MRs, effort reduction and co-management (stewardship of catch) to restore stocks. We employed a bioeconomic model using FEK, fishery catch and effort data, underwater survey information, predicted population growth and response to MR protection (no-take) to explore different management strategies and their trade-offs to restore stocks and improve catches. Our findings indicate that increased stewardship of catch coupled with 30% area closure (MR) provides the best option to reconstruct historic baselines. Based on model predictions, continued exploitation under the current management scheme is highly influenced by annual fluctuations and unsustainable. We propose a community-based co-management program to implement a MR in order to rebuild the lobster population while also providing conservation protection for marine species endemic to the Archipelago.